Note 3 - Segment Reporting Information

6 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

3

-

SEGMENT

REPORTING

INFORMATION

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s

three

operating segments are Lighting, Graphics, and Technology, each of which has a president who is responsible for that business and reports to the CODM. Corporate and Eliminations, which captures the Company’s corporate administrative activities, will also be reported in the segment information.

The Lighting Segment includes outdoor and indoor lighting utilizing both traditional and LED light sources that have been fabricated and assembled for the commercial, industrial market, the petroleum / convenience store market, the automotive dealership market, the quick service restaurant market, along with other markets the Company serves.

The Graphics Segment designs, manufactures and installs exterior and interior visual image elements such as traditional graphics, active digital signage along with the management of media content related to digital signage, LED video screens, and menu board systems that are either digital or traditional by design. These products are used in visual image programs in several markets, including the petroleum / convenience store market, multi-site retail operations, banking, and restaurants. The Graphics Segment implements, installs and provides program management services related to products sold by the Graphics Segment and by the Lighting Segment.

LED video screens that were previously reported in the Technology Segment in prior years’ results have been reclassified to the Graphics Segment. The movement of the LED video screen product line was the result of a change in management responsibility of this product line to the Graphics Segment president during the

first

quarter of fiscal

2017.

This movement aligns the product line with other digital visual image elements sold to graphics customers and is consistent with how the Company’s CODM manages the business. The movement of the video screen product line resulted in a reclassification of

$76,000

of operating loss from the Technology Segment to the Graphics Segment in the

second

quarter of fiscal

2016,

and

$3,000

of operating loss in the

first

half of fiscal

2016.

The Company deemed that

distribution channels and corresponding projected future cash flows that support a customer relationship intangible asset related to the LED video screen product line are adequate to support the asset. The net book value of the asset is

$492,000

as of

December

31,

2016

and future cash flows generated from this asset will continue to be monitored in future quarters.

The Technology Segment designs, engineers, and manufactures electronic circuit boards, assemblies and sub-assemblies, and various control system products used in other applications (primarily the control of solid-state LED lighting). This operating segment sells its products directly to customers (primarily in the transportation, original equipment manufacturers, sports, and medical markets) and also has significant inter-segment sales to the Lighting Segment.

The Company’s corporate administration activities are reported in the Corporate and Eliminations line item.  These activities primarily include intercompany profit in inventory eliminations, expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, stock option expense for options granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income tax assets.

There was

no

concentration of consolidated net sales in the

three

and

six

months ended

December

31,

2016

or in the

three

months ended

December

31,

2015.

The Company’s Lighting Segment and Graphics Segment net sales to a petroleum / convenience store customer represented approximately

$17,045,000

or

10%

of consolidated net sales in the

six

months ended

December

31,

2015.

There was

no

concentration of accounts receivable at

December

31,

2016

or

June

30,

2016.

Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of

December

31,

2016

and

December

31,

2015:

	Three Months Ended						Six Months Ended
( In thousands)	December 31						December 31
	2016			2015			2016			2015
Net Sales:
Lighting Segment	$	60,169		$	59,601		$	120,539		$	118,676
Graphics Segment		20,582			21,206			39,476			43,536
Technology Segment		4,907			3,880			9,802			8,400
	$	85,658		$	84,687		$	169,817		$	170,612
Operating Income (Loss):
Lighting Segment	$	2,738		$	5,182		$	5,529		$	10,864
Graphics Segment		1,174			1,959			2,191			4,193
Technology Segment		924			1,069			1,652			2,336
Corporate and Eliminations		(2,018	)		(2,830	)		(5,488	)		(6,250	)
	$	2,818		$	5,380		$	3,884		$	11,143
Capital Expenditures:
Lighting Segment	$	183		$	1,160		$	1,267		$	1,849
Graphics Segment		459			604			825			1,192
Technology Segment		22			108			34			141
Corporate and Eliminations		120			150			618			202
	$	784		$	2,022		$	2,744		$	3,384
Depreciation and Amortization:
Lighting Segment	$	791		$	717		$	1,638		$	1,422
Graphics Segment		376			237			736			471
Technology Segment		324			340			669			676
Corporate and Eliminations		279			304			562			605
	$	1,770		$	1,598		$	3,605		$	3,174

	December 31, 2016		June 30, 2016
Identifiable Assets:
Lighting Segment	$	91,010	$	95,168
Graphics Segment		36,888		33,490
Technology Segment		28,206		28,348
Corporate and Eliminations		39,732		38,554
	$	195,836	$	195,560

The segment net sales reported above represent sales to external customers.  Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.

The Company records a

10%

mark-up on intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:

	Three Months Ended				Six Months Ended
	December 31				December 31
(In thousands)	2016		2015		2016		2015
Lighting Segment inter-segment net sales	$	713	$	814	$	1,487	$	1,428
Graphics Segment inter-segment net sales	$	680	$	562	$	812	$	1,006
Technology inter-segment net sales	$	8,346	$	8,932	$	17,131	$	18,316

The Company’s operations are located solely within the United States. As a result, the geographic distribution of the Company’s net sales and long-lived assets originate within the United States.